Question

8. Yallawa Stores Ltd has two departments. The following balances were extracted from its books as at 31st December 2017 (in Le): Purchases: Department A Le720,000, Department B Le520,000. Rent and rates Le50,000; Commission Le55,000; Insurance Le5,000. Sales: Department A Le1,500,000, Department B Le1,250,000. Discount received Le124,000; Advertising Le20,000; Salaries and wages Le250,000; Depreciation Le35,000. Administration and general expenses Le50,000. Opening stock: Department A Le150,000, Department B Le100,000. Closing stock: Department A Le175,000, Department B Le142,000. Additional information — Expenses are to be apportioned to the departments as follows: (i) commission — on the basis of sales; (ii) salaries and wages — 3:2 for Department A and B respectively; (iii) discount received — 10% of purchases; (iv) other expenses to be apportioned equally. You are required to prepare a Departmental Trading, Profit and Loss Account for the year ended 31st December 2017.

Accepted Answer

See the Departmental Trading, Profit and Loss Account table in the Diagram column, along with the supporting workings table for the apportionment of Commission, Discount received, and Salaries and wages between Department A and Department B. Department A records a net profit of Le617,000 while Department B records a net profit of Le619,000, after apportioning Rent and rates, Insurance, Advertising, Depreciation and Administration and general expenses equally between the two departments, and apportioning Commission by sales ratio (30,000:25,000), Discount received at 10% of each department's purchases (72,000:52,000), and Salaries and wages in the ratio 3:2 (150,000:100,000).

WAEC Accounting 2020 Theory — Question 8

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